US: experts say rising auto loan delinquency reports are exaggerated

According to credit reporting bureaus Equifax and Experian Automotive, the media reports that US auto loan delinquencies are on the rise are actually overblown, with the segment actually being flat.

The two companies also addressed the recent fears of a bubble in subprime auto loans, claiming their data shows no record of such a trend. “From a data perspective, prime is growing faster than subprime,” said Amy Crews Cutts, chief economist for Equifax. “Subprime is growing at half the rate prime is growing.” The firm says the rate of auto loans delinquent 60 days or above last month was 1.15 percent, sliding from 1.24 percent in December. The 60-day rate was also lower than the year-earlier months in both November and December 2014.

Following the same trend, Experian Automotive recently announced the rate of delinquencies of 60 days or more was actually flat when the fourth quarter is taken into account, standing at 0.72 percent, a bit below the 0.73 percent figure for the year-earlier period. “This whole idea that subprime is kind of ‘out of control’ just isn’t substantiated,” said Melinda Zabritski, Experian Automotive senior director. “Volume is up across the board.” Experian added that prime-risk loans, the ones carrying VantageScore credit figures of 661 and above, took up 61.2 percent of outstanding auto loans in the fourth quarter of 2014, rising slightly from 60.9 percent during the same period of 2013. According to the analysts, the recent media coverage of the sector was rattled by the February 17 Household Debt and Credit Report from the Federal Reserve Bank of New York – with the rate of 90-day auto loan delinquencies rising 0.12 percent from the third to the fourth quarter of 2014.